Supreme Court to Review Administrative Law Case with Healthcare Implications

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On June 16, 2014, the U.S. Supreme Court granted review of a case implicating whether government agencies must give notice to, and respond to comments from, the public before altering or amending regulatory interpretations.  This case may potentially affect healthcare entities if the Court chooses to overturn existing precedent in the U.S. Court of Appeals for the District of Columbia Circuit, where many administrative law cases are argued, that requires the Government to engage in notice and comment rulemaking before altering its previously settled interpretations of regulations, such as those contained in Federal Register preamble language or in program manuals.  Oral argument before the Court is expected this fall. 

The case, Perez v. Mortgage Bankers Ass’n, involves a 2010 revision to a 2006 Department of Labor opinion letter interpreting provisions of a Fair Labor Standards Act regulation.  The 2006 opinion letter stated that mortgage loan officers were exempt from minimum wage and overtime protections.  In 2010, the Department of Labor withdrew the 2006 letter and issued a new opinion declaring that such workers were subject to the regulation.  The Mortgage Bankers Association challenged the ruling under the Administrative Procedure Act, and the D.C. Circuit ruled in the Association’s favor.  The D.C. Circuit applied its prior rulings in Paralyzed Veterans of America v. D.C. Arena, 117 F.3d 579 (D.C. Cir. 1997), and Alaska Professional Hunters Ass’n v. FAA, 177 F.3d 1030 (D.C. Cir. 1999), and held that the Department of Labor was required to go through notice and comment rulemaking when significantly revising a previously “definitive” interpretation of a regulation, such as the 2006 opinion letter.

Healthcare providers have relied on these decisions in the past to argue that CMS and other agencies must go through notice and comment rulemaking before altering previous interpretations of regulations.  The First Circuit, however, has previously held that CMS does not have to provide such notice when changing its interpretive rules.  See Warder v. Shalala, 149 F.3d 579 (1st Cir. 1998).  The Supreme Court’s ultimate decision in Perez, therefore, could resolve this circuit split.

Reporter, Christopher Kenny, Washington, D.C., + 1 202 626 9253, ckenny@kslaw.com.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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